Last month the Obama administration approved the Car Allowance Rebate System (CARS), or the Cash for Clunkers Bill. The Cash for clunkers Program is designed to encourage people to trade in their old, inefficient vehicles for newer and more fuel efficient cars or trucks. It is also designed to help the struggling auto industry.

Car Allowance Rebate System (CARS)

The Cash For Clunkers program starts July 1st and ends November 1st 2009, or whenever funds run out, whichever happens first. Eligible cars (clunkers) can be traded in for a voucher redeemable toward the purchase of a new, more fuel efficient vehicle. Vouchers are worth either $3,500 or $4,500, depending on several factors, including the difference in fuel efficiency between the old and new vehicles.

Update: The Cash for Clunkers Program was suspended temporarily when funds ran out. Congress is pushing for an additional $2 billion in funding to extend the Cash for Clunkers Program.

How to Redeem a Cash for Clunkers Voucher

Before you can redeem a Car Allowance Rebate System (CARS) voucher, you must first determine if you have a Cash for Clunkers eligible trade-in. Only cars that are between 10 and 25 years old with a combined mpg rating of 18mpg or less qualify for the Cash For Clunkers program.

Find out if your car is eligible for the Cash For Clunkers Program.

Avoid scams! Be aware that there are multiple Cash For Clunkers scams, so be sure that you do not give personal information away on any websites, or send any money. The program is FREE to use and you will not have to pay anyone to register or join.

Step 1 – mile per gallon eligibility requirements. Determine if your vehicle is eligible. Go to the official Car Allowance Rebate System (CARS) website set up by the government: http://cars.gov. Here you can look up the combined mpg rating for your car. You will need to contact the National Highway Traffic Safety Administration (NHTSA) if your car is not listed.

Step 2 – ownership, driveability, and insurance criteria. To qualify for the CARS program, you must have had the vehicle under ownership and insurance for the previous 12 months, and the car must be roadworthy and driveable.

Step 3 – trade in your vehicle. once you pass the first two steps, you can now trade in your vehilce. You should note that you do not need a physical “voucher” befre you visit your dealership. The dealerships are equipped to handle the required paperwork necessary to receive the $3,500 to $4,500 voucher. And they will be more than willing to help you apply for the voucher becuase you need to purchase a new vehicle in order to redeem the voucher.

Additional Cash For Clunkers Information

• Vehicles must be between 10 and 25 years old.
• No physical voucher is required – dealerships will handle the required paperwork.
• You must purchase or lease a new vehicle to redeem the Cash for Clunkers voucher. Leases must be for at least 5 years.
• Used car purchases are not eligible at this time.
• Trade-in vehicles must get a combined 18mgp or less as determined by the official government site – FuelEconomy.gov. There are no exceptions at this time.
• You must have had the vehicle registered and insured in your name for the previous year to qualify.
• Trade-in vehicles will be destroyed, so make sure your trade-in value is less than the value of the CARS voucher, or you will be losing money on the deal.
• Car must be in drivable condition when it is traded in.

Here is additional information about the Cash for Clunkers program:

• Common Questions About The Cash For Clunkers Program.
• Cash for Clunkers Bill Details: CARS Program.
• CARS or Cash for Clunkers.
• Cash for Clunkers Program.
• Cash for Clunkers – Car Allowance and Rebate System.

Dave Ramsey is one of America’s most popular money gurus and is renowned for his tough love attitude toward eliminating debt and working toward financial freedom. Perhaps Dave Ramsey’s most popular training series is his debt elimination and financial freedom program: Financial Peace University.  The 7 Baby Steps are the basis for Financial Peace University.

Dave Ramsey’s Baby Steps

The purpose of Dave Ramsey’s 7 Baby Steps is to provide a step by step guide to help people get out of debt and achieve financial freedom. As you read through the steps, you will notice that they methodically help people improve their finances by making the commitment to stop using debt to fund their lifestyle, build an emergency fund to handle any unexpected expenses (and not rely on debt to do it!), eliminate all debt, then begin saving and investing for a bright future.

Dave Ramsey’s 7 Baby Steps are as follows:

• Step 0: No More Debt!
• Step 1: $1,000 to start an Emergency Fund.
• Step 2: Pay off all debt using the Debt Snowball.
• Step 3: 3 to 6 months of expenses in savings.
• Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement.
• Step 5: College funding for children.
• Step 6: Pay off home early.
• Step 7: Build wealth and give! (Invest in mutual funds and real estate).

Why follow Dave Ramsey’s Baby Steps?

Dave Ramsey’s Baby Steps are a proven system to get out of debt and achieve financial freedom. The first steps focus on the main point of the program – to get out of debt. Being debt free is only the first step to financial freedom. Along with debt elimination, Dave Ramsey advocates making an emergency fund to avoid using debt in the future, saving and investing, and finally, sharing your wealth with others.

Like all financial programs, there are prros and cons to following each step as written. The key is to examine the principles of the program and determine which steps meet your needs and apply them accordingly. It is also important to note that Dave Ramsey encourages his audience to work on Steps 4-7 at the same time if they feel that is the right thing to do for their personal situation.